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Transactive Systems Ltd., which processed more than €1 billion of payments every month, has had its local licence revoked by the Bank of Lithuania. The revocation resulted from numerous compliance failures, reported by the bank on June 01st.
Transactive was found to have repeatedly violated AML/CFT requirements, according to a statement issued on June 01st by the central bank, which imposed restrictions upon the company earlier this year and began reviewing its operations. A report by the Lithuanian regulatory authority found that the company’s Lithuanian subsidiary failed to identify clients properly, allowed anonymous accounts to be opened, and provided inaccurate information. Transactive Systems UAB, the company’s local subsidiary, was fined €280,000 ($300,000).
Electronic money institutions are lightly regulated financial technology firms that allow them to process payments and hold clients’ funds. The Bank of Lithuania and the UK Financial Conduct Authority have issued hundreds of licences. Various types of fraud and money laundering have been alleged in this sector.
“We are certainly disappointed by the Bank of Lithuania’s decision this morning,” Transactive’s external spokesman, Roger Sauerhaft, said in an emailed statement. He added that a remediation plan was being developed by the company “diligently” to address the regulator’s concerns. “Given that, we were surprised to learn of today’s announcement. We remain committed to our mission of connecting the world with real-time payments and are assessing the next steps for our business within the European Union,” he added.
A Transactive employee and one of its founders were convicted of separate federal charges in Nevada and Florida, and one of Transactive’s founding investors was convicted of an unrelated fraud in Florida.
A significant player in the industry, Transactive has often worked with high-risk customers. Transactive’s clients and accounts were the subjects of complaints from several EU regulators and individuals, according to the statement. A website maintained by the Financial Conduct Authority confirms that the FCA still licences Transactive. An FCA refused to comment on whether it planned to take action. “We look at a wide range of information in our supervision of firms, including action taken by our international counterparts,” the FCA said in response.